                                 CODE OF VIRGINIA

VIRGINIA HOUSING OPPORTUNITY TAX CREDIT (§ 58.1-439.30)

A. Subject to the provisions of subsection H, a housing opportunity tax credit
may be allowed for each qualified project for each year of the credit period, in
an amount up to the amount of federal low-income housing tax credit allocated or
allowed by the Authority to such qualified project. The credit shall be allowed
ratably for each qualified project, with one-tenth of the total credit amount
allowed annually for 10 years over the credit period, except that there shall be
a reduction in the tax credit allowable in the first year of the credit period
due to the calculation in 26 U.S.C. &#xA7; 42(f)(2) and any reduction by reason
of 26 U.S.C. &#xA7; 42(f)(2) in the credit allowable for the first taxable year
of the credit period shall be allowable for the first taxable year following the
credit period.

B. 1. For taxable years beginning on and after January 1, 2021, but before
January 1, 2031, a qualified taxpayer may claim a housing opportunity tax credit
against its Virginia tax liability prior to reduction by any other credits
allowed the taxpayer. The housing opportunity tax credit may be allocated by
pass-through entities to some or all of its partners, members, or shareholders
in any manner agreed to by such persons, regardless of whether or not any such
person is allocated or allowed any portion of any federal low-income housing tax
credit with respect to the qualified project, whether or not the allocation of
the housing opportunity tax credit under the terms of the agreement has
substantial economic effect within the meaning of § 704(b) of the Internal
Revenue Code, and whether any such person is deemed a partner for federal income
tax purposes as long as the partner or member would be considered a partner or
member as defined under applicable state law, and has been admitted as a partner
or member on or prior to the date for filing the qualified taxpayer&#8217;s tax
return, including any amendments thereto, with respect to the year of the
housing opportunity tax credit. Such pass-through entities or qualified taxpayer
may assign all or any part of its interest, including its interest in the tax
credits, to one or more pass-through entities or qualified taxpayers, and the
qualified taxpayer shall be able to claim the housing opportunity tax credit so
long as its interest is acquired prior to the filing of its tax return claiming
the housing opportunity tax credit.

   2. If a housing opportunity tax credit has been awarded according to the terms
   of subsection G prior to January 1, 2031, such credit may continue to be
   claimed on a return for taxable years on and after January 1, 2031, but only
   pursuant to the applicable credit period specified in &#xA7; 58.1-439.29.

C. The housing opportunity tax credit authorized by this article shall not be
refundable. Any housing opportunity tax credit not used in a taxable year may be
carried forward by a qualified taxpayer for the succeeding five years.

D. A qualified taxpayer claiming a housing opportunity tax credit shall submit a
copy of the eligibility certificate at the time of filing its tax return with
the Department. If the owner of the qualified project has applied to the
Authority for the eligibility certificate but the Authority has not yet issued
the eligibility certificate at the time the qualified taxpayer files its
original tax return claiming the housing opportunity tax credit, the taxpayer
may claim the housing opportunity tax credit based upon the amount of tax credit
set forth in the award letter issued by the Authority for the housing
opportunity tax credit issued to the qualified project and shall amend its tax
return to include the eligibility certificate upon its receipt. If the amount of
tax credit in the eligibility certificate is different than the amount of tax
credit previously claimed, the taxpayer shall adjust the tax credit amount
claimed on the amended tax return.

E. If under &#xA7; 42 of the Internal Revenue Code, as amended, a portion of any
federal low-income housing credits taken on a qualified project is required to
be recaptured or is otherwise disallowed during the credit period, the taxpayer
claiming housing opportunity tax credits with respect to such project shall also
be required to recapture a portion of any tax credits authorized by this
article. The percentage of housing opportunity tax credits subject to recapture
shall be equal to the percentage of federal low-income housing credits subject
to recapture or otherwise disallowed during such period. Any tax credits
recaptured or disallowed shall increase the income tax liability of the
qualified taxpayer who claimed the tax credits in a like amount and shall be
included on the tax return of the qualified taxpayer submitted for the taxable
year in which the recapture or disallowance event is identified. The balance of
any tax credits recaptured or disallowed shall be allocated by the Authority for
any qualified project in accordance with subsection G.

F. The Authority shall administer the housing opportunity tax credit program and
shall be authorized to promulgate the regulations and guidelines necessary to
implement and administer this article. Such regulations and guidelines may
include the imposition of application, allocation, certification, and monitoring
fees designed to recoup the costs of the Authority in administering the housing
opportunity tax credit program.

G. 1. Any housing opportunity tax credit amounts authorized in a calendar year
that are subsequently (i) canceled and returned to the Authority or (ii)
recaptured or disallowed pursuant to subsection E may be awarded in the
following calendar year, but no later than December 31, 2030. If the amount of
housing opportunity tax credits authorized in a calendar year for qualified
projects is less than the total amount of credits available for qualified
projects under subdivision H 2, the balance of such credits, in an amount not
greater than 15 percent of the amount of credits available for qualified
projects under subdivision H 2, (a) shall be allocated by the Authority for any
qualified project in the following calendar year, (b) shall not be allocated at
any time after such following calendar year, and (c) shall be allocated no later
than December 31, 2030.

   2. Such housing opportunity tax credits issued pursuant to this subsection
   shall be allowed ratably, with one-tenth of the total amount of credits
   allowed annually for 10 years over the credit period, except that there shall
   be a reduction in the tax credit allowable in the first year of the credit
   period due to the calculation in 26 U.S.C. &#xA7; 42(f)(2) and any reduction
   by reason of 26 U.S.C. &#xA7; 42(f)(2) in the credit allowable for the first
   taxable year of the credit period shall be allowable for the first taxable
   year following the credit period.

H. 1. Notwithstanding any other provision of law to the contrary, the aggregate
amount of housing opportunity tax credits authorized for all qualified projects
under this article shall not exceed $575 million across all calendar years.

   2. The total amount of housing opportunity tax credits authorized for
   qualified projects under this article shall not exceed $15 million for
   calendar year 2021.

   3. For calendar years 2022 through 2025, the total amount of housing
   opportunity tax credits authorized for qualified projects under this article
   shall not exceed $60 million per calendar year.

   4. For calendar years 2026 through 2030, the total amount of housing
   opportunity tax credits authorized for qualified projects under this article
   shall not exceed $64 million per calendar year.

   5. Such credits issued on and after January 1, 2022, shall be allowed ratably,
   with one-tenth of the total amount of credits allowed annually for 10 years
   over the credit period, except that there shall be a reduction in the tax
   credit allowable in the first year of the credit period due to the calculation
   in 26 U.S.C. &#xA7; 42(f)(2) and any reduction by reason of 26 U.S.C. &#xA7;
   42(f)(2) in the credit allowable for the first taxable year of the credit
   period shall be allowable for the first taxable year following the credit
   period.

I. Notwithstanding any provision of law or regulation to the contrary, only
Virginia housing opportunity tax credits awarded in calendar year 2021, up to a
maximum of $15 million total for all taxpayers in all taxable years, may be
claimed pursuant to the provisions of this section as set forth in Chapter 495
of the Acts of Assembly of 2021, Special Session I, prior to its amendment by
the ninth enactment of Chapter 2 of the Acts of Assembly of 2022, Special
Session I.

J. The Authority shall, upon request from the Chairs of the House Committee on
Appropriations, the House Committee on Finance, and the Senate Committee on
Finance and Appropriations, provide information, data, and any other requested
advisement on the potential structure and cost of a separately authorized
certificated Virginia housing opportunity tax credit program that would allow a
qualified project to sell all or any portion of its Virginia housing opportunity
tax credits, to one or more unrelated taxpayers based on findings in the report
of the Department of Housing and Community Development and the Authority
stakeholder advisory group submitted pursuant to Chapter 517 of the Acts of
Assembly of 2020.

K. 1. Of the $60 million of Virginia housing opportunity tax credits authorized
per calendar year from 2022 through 2025 for qualified projects by the Authority
pursuant to this article, $20 million of such credits shall be first allocated
exclusively for qualified projects located in a locality with a population no
greater than 35,000 as determined by the most recent United States census.

   2. Of the $64 million of Virginia housing opportunity tax credits authorized
   per calendar year from 2026 through 2030 for qualified projects by the
   Authority pursuant to this article, $20 million of such credits shall be
   reserved for qualified projects located in a geographic area within the
   Balance of State Pool. The Authority shall notify the Virginia Housing
   Commission upon any change to the Balance of State Pool.

   3. Such allocation of Virginia housing opportunity tax credits shall
   constitute the minimum amount of such tax credits to be allocated for
   qualified projects in such localities. However, if the amount of such tax
   credits requested for qualified projects in such localities is less than the
   total amount of such credits available for qualified projects in such
   localities, the balance of such credits shall be allocated for any qualified
   project, regardless of location. In allocating or allowing such credits to
   qualified projects in such localities, the Authority may give equal
   consideration to qualified projects allocated or allowed a federal low-income
   housing credit in an amount equal to the 10-year present value calculation of
   the percentages prescribed under 26 U.S.C. &#xA7;&#xA7; 42(b)(1)(B)(i) and
   42(b)(1)(B)(ii).

HISTORY: 2021, Sp. Sess. I, c. 495; 2022, Sp. Sess. I, cc. 2, 3; 2023, Sp. Sess.
I, c. 1; 2025, c. 725.